Broadcom Stock Slides on Vague Long-Term AI Outlook

• Broadcom (AVGO) shares dropped nearly 6% in premarket trading after CEO Hock Tan declined to provide 2026 AI revenue guidance and disclosed a $73 billion AI backlog (described as a “minimum”) to be shipped over the next six quarters, disappointing investors seeking clearer visibility.
• Despite beating Q4 expectations with $18 billion in revenue and guiding Q1 to $19.1 billion (above the $18.5 billion consensus), concerns over lengthening 6 – 12 month lead times and narrowing margins from custom AI chips overshadowed the strong results and a 10% dividend increase.
• AI semiconductor revenue is set to double year-over-year to $8.2 billion in Q1, fueled by an $11 billion Anthropic order, prior $10 billion deals, OpenAI custom silicon collaboration, and Broadcom’s critical role in Google Cloud TPU-based clusters.

Broadcom Inc. (AVGO) shares declined sharply in premarket trading, dropping 5.67% to $383.31 after the company’s post-earnings conference call left investors wanting more precise visibility into the trajectory of its fast-growing AI business. Despite delivering a strong fiscal fourth-quarter beat and guiding fiscal first-quarter revenue to $19.1 billion – well above the $18.5 billion consensus – the market reaction centered on CEO Hock Tan’s reluctance to provide a 2026 AI revenue forecast and on commentary that highlighted lengthening lead times and margin pressure in the AI segment.

The core point of contention was Tan’s disclosure of a $73 billion backlog of AI product orders scheduled for delivery over the next six quarters. Although he stressed that this figure represents a “minimum” and that additional orders are expected to flow in continuously, the absence of a firmer multi-year outlook disappointed investors who have bid the stock up 75% year-to-date to a close of $406.37 on Thursday. Tan explained that lead times currently range from six months to a full year depending on the specific custom accelerator or networking component, making precise longer-term forecasting difficult. He explicitly declined to offer 2026 AI guidance, calling it “a moving target.”

Broadcom’s AI semiconductor revenue continues to scale rapidly, with the company projecting $8.2 billion in the fiscal first quarter ending February 2026 – roughly double the year-ago figure. Custom silicon remains the primary growth engine, bolstered by several multibillion-dollar commitments. In the fourth quarter alone, Anthropic placed an $11 billion order, following a $10 billion award in the third quarter. A separate unidentified customer signed a $1 billion deal. Longer-term partnerships further underpin the backlog: OpenAI is collaborating with Broadcom on custom AI chip designs announced in October, while Anthropic’s previously disclosed multiyear, tens-of-billions commitment to Alphabet’s Google Cloud also relies heavily on Broadcom-designed components for Google’s TPU-based clusters.

These relationships position Broadcom as one of the few companies besides Nvidia Corp. (NVDA) to secure meaningful share of the custom accelerator and high-bandwidth networking spend driving the current AI infrastructure cycle. Broadcom has aggressively upgraded its Jericho and Tomahawk Ethernet switch families and expanded its optical connectivity portfolio to address the exploding demand for low-latency, high-throughput interconnects inside hyperscale data centers – areas where faster data movement is becoming as critical as raw compute power.

The fiscal fourth quarter itself was robust, with revenue of $18 billion and adjusted earnings per share of $1.95 exceeding estimates of $17.5 billion and $1.87, respectively. Management raised the quarterly dividend 10% to $0.65 per share, signaling confidence in cash-flow generation even as gross margins face near-term compression from the mix shift toward lower-margin custom AI accelerators.

For CEO Hock Tan, the stakes in the AI ramp are particularly high. His long-term incentive package includes 610,521 restricted shares if cumulative AI revenue reaches $90 billion by fiscal 2030, with the award scaling to 300% of target if the business hits $120 billion over the same period.

While Broadcom remains firmly in Nvidia’s shadow in the public narrative around AI processors, its entrenched role in custom silicon for the largest model builders and its dominance in data-center networking have driven a re-rating that now leaves little room for ambiguity. Friday’s selloff reflects the market’s demand for greater granularity on the timing and margin profile of what is rapidly becoming the company’s most important growth driver.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 45% to 91% OFF ... Use Discount Code: UNO
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM